Business growth and franchising

Business growth and franchising

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This is a very early enquiry but something that I have been asked to look into.

Client is operating profitable and successful transport company and is considering setting up in neighbouring areas.

We have had a very brief discussion and he suggested franchising as a possibility.

He has managers at the current company, his idea was to set-up another "branch" nearby and have his current manager run the new business.

The new business would operate under the same trading name and would be run in the same way as the existing business. Owners and managers would share profits.

Client wants to maintain some control in order to protect the existing business, however he believes it would be unnecessary to have strict rules in place for how the business would be run. Also client will provide the capital necessary for the new start up.

My understanding is that for this to be classed as a franchise, the franchisee makes the capital contribution not the franchisor. This seems more like a branch to me.

I will of course advise my client to seek legal advice if he does decide to go ahead with this, but I'd like to be able to give him some basic info.

Has anyone got any pointers?
Louise Procter

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